서울
:
한국조세연구원

Date

2008-12

Pages

167

Subject Country

South Korea(Asia and Pacific)

Language

Korean

File Type

Link

Subject

Economy < Economic Administration

Holding

한국조세연구원

License

Abstract

Determining the mix of direct and indirect taxes is a fundamental issue in tax policy design. This study provides a new framework for evaluating the direction and magnitude of direct-indirect tax reforms in Korea. In discussing how the tax system affects economic performance, it is important to distinguish the efficiency and equity effects of taxes. Therefore we also focus on the relationship between efficiency and equity arguments for restructuring the Korean tax system.First, we investigate current patterns of taxation and their recent trends in OECD countries. Then we review the theoretical models and some of empirical evidence regarding the consequences of changing the direct-indirect tax mix. Finally we evaluate various economic effects of changing the mix of direct personal income taxes, corporate income taxes, and consumption taxes in Korea. The results imply that on efficiency grounds, Korea should rely on lower corporate income taxes and higher consumption taxes for additional revenue, while addressing rising equity concerns via progressive personal income taxes.